Double Counting can be avoided by summing up total output of all firms

False,

Double Counting can be avoided either by taking the value of final output or by taking value added by each producing unit.

Explanation:-

Let’s understand with an example:

The farmer produces goods and sale it to dealer for ₹ 2,000

dealer sells it to the retailer for ₹ 2,500

The retailer sells it to the consumer for ₹ 2,800

If the value of final goods is taken

Total output = ₹ 2,800

If the value of value added is taken then

Value added by farmer = ₹ 2,000

Value added by dealer = ₹ 500 (₹ 2,500 – ₹ 2,000)

Value added by retailer = ₹ 300 (₹ 2,800 – ₹ 2,500)

Total value of output = ₹ 2,00o + ₹ 500 + ₹ 300 = ₹ 2,800

Total value of output = ₹ 2,800